Adjusting entries : Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. The purpose of adjusting entries is to adjust the revenue, and the expenses for the period in which they actually occurred. Adjusting entries are classified into two categories. They are as follows, Deferrals, or Accruals. Deferrals: Deferrals refer to the revenues that are collected in advance before the services are provided or sales are made to the customer, and the expenses are paid in advance before the expenses are incurred. Deferrals are classified into two types. They are prepaid expenses, and unearned revenues. Prepaid expenses: The expenses are paid in cash, before they are incurred. Unearned revenue: The cash is received, before the services are performed. To identify: Theitems that may result in adjusting entries for deferrals.

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Answer 1

Question

Chapter 4, Problem 4.1EYCT

(a)

To determine

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. The purpose of adjusting entries is to adjust the revenue, and the expenses for the period in which they actually occurred.

Adjusting entries are classified into two categories. They are as follows,

Deferrals, or

Accruals.

Deferrals:

Deferrals refer to the revenues that are collected in advance before the services are provided or sales are made to the customer, and the expenses are paid in advance before the expenses are incurred.

Deferrals are classified into two types. They are prepaid expenses, and unearned revenues.

Prepaid expenses: The expenses are paid in cash, before they are incurred.

Unearned revenue: The cash is received, before the services are performed.

To identify: Theitems that may result in adjusting entries for deferrals.

(b)

To determine

Accruals:

Accruals refer to the revenues that are generated from goods delivered or, service performed to the customer, but cash is not yet received from the customer, and the expenses are incurred, but cash is not yet paid.

Accruals are classified into two types. They are accrued revenues, and accrued expenses.

Accrued revenues: Revenues are generated but not yet received in cash.

Accrued expenses: Expenses are incurred but not yet paid in cash.

To identify: The two items that may result in adjusting entries for accruals.

(c)

To determine

To identify: The amount of depreciation and amortization expense for 2014 and 2013, and identify where it is reported

(d)

To determine

To identify: The amounts of income tax reported in the cash flow, and identify the amount of income tax expense reported in the income statement.

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On December 31, calculated the payroll, which indicates gross earnings for wages ($460,000), payroll deductions for income tax ($48,000), payroll deductions for FICA ($40,000), payroll deductions for United Way ($6,000), employer contributions for FICA (matching), and state and federal unemployment taxes ($4,000). Employees were paid in cash, but payments for the corresponding payroll deductions have not been made and employer taxes have not yet been recorded. Collected rent revenue of $2,100 on December 10 for office space that Sandler rented to another business. The rent collected was for 30 days from December 12 to January 10 and was credited in full to Deferred Revenue. Required: 1. & 2. Prepare the entries required on December 31 to record payroll, the collection of rent on December 10 and adjusting journal entry on December 31. 3. Show how any liabilities related to these items should be reported on the company’s balance sheet at December 31

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Answer 2

Question

Chapter 4, Problem 4.1EYCT

(a)

To determine

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. The purpose of adjusting entries is to adjust the revenue, and the expenses for the period in which they actually occurred.

Adjusting entries are classified into two categories. They are as follows,

Deferrals, or

Accruals.

Deferrals:

Deferrals refer to the revenues that are collected in advance before the services are provided or sales are made to the customer, and the expenses are paid in advance before the expenses are incurred.

Deferrals are classified into two types. They are prepaid expenses, and unearned revenues.

Prepaid expenses: The expenses are paid in cash, before they are incurred.

Unearned revenue: The cash is received, before the services are performed.

To identify: Theitems that may result in adjusting entries for deferrals.

(b)

To determine

Accruals:

Accruals refer to the revenues that are generated from goods delivered or, service performed to the customer, but cash is not yet received from the customer, and the expenses are incurred, but cash is not yet paid.

Accruals are classified into two types. They are accrued revenues, and accrued expenses.

Accrued revenues: Revenues are generated but not yet received in cash.

Accrued expenses: Expenses are incurred but not yet paid in cash.

To identify: The two items that may result in adjusting entries for accruals.

(c)

To determine

To identify: The amount of depreciation and amortization expense for 2014 and 2013, and identify where it is reported

(d)

To determine

To identify: The amounts of income tax reported in the cash flow, and identify the amount of income tax expense reported in the income statement.

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Answer 3

Question

Chapter 4, Problem 4.1EYCT

(a)

To determine

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. The purpose of adjusting entries is to adjust the revenue, and the expenses for the period in which they actually occurred.

Adjusting entries are classified into two categories. They are as follows,

Deferrals, or

Accruals.

Deferrals:

Deferrals refer to the revenues that are collected in advance before the services are provided or sales are made to the customer, and the expenses are paid in advance before the expenses are incurred.

Deferrals are classified into two types. They are prepaid expenses, and unearned revenues.

Prepaid expenses: The expenses are paid in cash, before they are incurred.

Unearned revenue: The cash is received, before the services are performed.

To identify: Theitems that may result in adjusting entries for deferrals.

(b)

To determine

Accruals:

Accruals refer to the revenues that are generated from goods delivered or, service performed to the customer, but cash is not yet received from the customer, and the expenses are incurred, but cash is not yet paid.

Accruals are classified into two types. They are accrued revenues, and accrued expenses.

Accrued revenues: Revenues are generated but not yet received in cash.

Accrued expenses: Expenses are incurred but not yet paid in cash.

To identify: The two items that may result in adjusting entries for accruals.

(c)

To determine

To identify: The amount of depreciation and amortization expense for 2014 and 2013, and identify where it is reported

(d)

To determine

To identify: The amounts of income tax reported in the cash flow, and identify the amount of income tax expense reported in the income statement.

Expert Solution & Answer

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Answer 4

Question

Chapter 4, Problem 4.1EYCT

(a)

To determine

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. The purpose of adjusting entries is to adjust the revenue, and the expenses for the period in which they actually occurred.

Adjusting entries are classified into two categories. They are as follows,

Deferrals, or

Accruals.

Deferrals:

Deferrals refer to the revenues that are collected in advance before the services are provided or sales are made to the customer, and the expenses are paid in advance before the expenses are incurred.

Deferrals are classified into two types. They are prepaid expenses, and unearned revenues.

Prepaid expenses: The expenses are paid in cash, before they are incurred.

Unearned revenue: The cash is received, before the services are performed.

To identify: Theitems that may result in adjusting entries for deferrals.

(b)

To determine

Accruals:

Accruals refer to the revenues that are generated from goods delivered or, service performed to the customer, but cash is not yet received from the customer, and the expenses are incurred, but cash is not yet paid.

Accruals are classified into two types. They are accrued revenues, and accrued expenses.

Accrued revenues: Revenues are generated but not yet received in cash.

Accrued expenses: Expenses are incurred but not yet paid in cash.

To identify: The two items that may result in adjusting entries for accruals.

(c)

To determine

To identify: The amount of depreciation and amortization expense for 2014 and 2013, and identify where it is reported

(d)

To determine

To identify: The amounts of income tax reported in the cash flow, and identify the amount of income tax expense reported in the income statement.

Expert Solution & Answer

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See solution

Answer 5

Chapter 4, Problem 4.1EYCT

(a)

To determine

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. The purpose of adjusting entries is to adjust the revenue, and the expenses for the period in which they actually occurred.

Adjusting entries are classified into two categories. They are as follows,

Deferrals, or

Accruals.

Deferrals:

Deferrals refer to the revenues that are collected in advance before the services are provided or sales are made to the customer, and the expenses are paid in advance before the expenses are incurred.

Deferrals are classified into two types. They are prepaid expenses, and unearned revenues.

Prepaid expenses: The expenses are paid in cash, before they are incurred.

Unearned revenue: The cash is received, before the services are performed.

To identify: Theitems that may result in adjusting entries for deferrals.

(b)

To determine

Accruals:

Accruals refer to the revenues that are generated from goods delivered or, service performed to the customer, but cash is not yet received from the customer, and the expenses are incurred, but cash is not yet paid.

Accruals are classified into two types. They are accrued revenues, and accrued expenses.

Accrued revenues: Revenues are generated but not yet received in cash.

Accrued expenses: Expenses are incurred but not yet paid in cash.

To identify: The two items that may result in adjusting entries for accruals.

(c)

To determine

To identify: The amount of depreciation and amortization expense for 2014 and 2013, and identify where it is reported

(d)

To determine

To identify: The amounts of income tax reported in the cash flow, and identify the amount of income tax expense reported in the income statement.

Answer 6

Chapter 4, Problem 4.1EYCT

(a)

To determine

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. The purpose of adjusting entries is to adjust the revenue, and the expenses for the period in which they actually occurred.

Adjusting entries are classified into two categories. They are as follows,

Deferrals, or

Accruals.

Deferrals:

Deferrals refer to the revenues that are collected in advance before the services are provided or sales are made to the customer, and the expenses are paid in advance before the expenses are incurred.

Deferrals are classified into two types. They are prepaid expenses, and unearned revenues.

Prepaid expenses: The expenses are paid in cash, before they are incurred.

Unearned revenue: The cash is received, before the services are performed.

To identify: Theitems that may result in adjusting entries for deferrals.

Answer 7

Chapter 4, Problem 4.1EYCT

(a)

To determine

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. The purpose of adjusting entries is to adjust the revenue, and the expenses for the period in which they actually occurred.

Adjusting entries are classified into two categories. They are as follows,

Deferrals, or

Accruals.

Deferrals:

Deferrals refer to the revenues that are collected in advance before the services are provided or sales are made to the customer, and the expenses are paid in advance before the expenses are incurred.

Deferrals are classified into two types. They are prepaid expenses, and unearned revenues.

Prepaid expenses: The expenses are paid in cash, before they are incurred.

Unearned revenue: The cash is received, before the services are performed.

To identify: Theitems that may result in adjusting entries for deferrals.

Answer 8

(b)

To determine

Accruals:

Accruals refer to the revenues that are generated from goods delivered or, service performed to the customer, but cash is not yet received from the customer, and the expenses are incurred, but cash is not yet paid.

Accruals are classified into two types. They are accrued revenues, and accrued expenses.

Accrued revenues: Revenues are generated but not yet received in cash.

Accrued expenses: Expenses are incurred but not yet paid in cash.

To identify: The two items that may result in adjusting entries for accruals.

Answer 9

(b)

To determine

Accruals:

Accruals refer to the revenues that are generated from goods delivered or, service performed to the customer, but cash is not yet received from the customer, and the expenses are incurred, but cash is not yet paid.

Accruals are classified into two types. They are accrued revenues, and accrued expenses.

Accrued revenues: Revenues are generated but not yet received in cash.

Accrued expenses: Expenses are incurred but not yet paid in cash.

To identify: The two items that may result in adjusting entries for accruals.

Answer 10

(c)

To determine

To identify: The amount of depreciation and amortization expense for 2014 and 2013, and identify where it is reported

Answer 11

(c)

To determine

To identify: The amount of depreciation and amortization expense for 2014 and 2013, and identify where it is reported

Answer 12

(d)

To determine

To identify: The amounts of income tax reported in the cash flow, and identify the amount of income tax expense reported in the income statement.

Answer 13

(d)

To determine

To identify: The amounts of income tax reported in the cash flow, and identify the amount of income tax expense reported in the income statement.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 4 - Prob. 1Q Ch. 4 - Identify and stale two generally accepted...Ch. 4 - Prob. 3Q Ch. 4 - Prob. 4Q Ch. 4 - Prob. 5Q Ch. 4 - Why may the financial information in an unadjusted...Ch. 4 - Distinguish between the two categories of...Ch. 4 - What types of accounts does a company debit and...Ch. 4 - Prob. 9Q Ch. 4 - Prob. 10Q

Solution Summary: The author explains that adjusting entries are made at the end of an accounting period in accordance with revenue recognition principle.

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To identify: The amount of depreciation and amortization expense for 2014 and 2013, and identify where it is reported

To identify: The amounts of income tax reported in the cash flow, and identify the amount of income tax expense reported in the income statement.

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